patient entering MRI machineA bill proposed in the US House of Representatives may cause physicians to significantly restructure their practices as they relate to in-office ancillary services (IOAS).

Promoting Integrity in Medicare Act of 2013

The Stark Law is a federal statute which prohibits physicians from making referrals for Medicare-covered designated health services (DHS) to an entity with which the physician or an immediate family member of the physician has a financial relationship with that entity. Several exceptions apply, including one for in-office ancillary services. This exception generally allows a physician to make referrals for DHS within his or her own practice if the physician meets requirements relating to (i) the supervision of services, (ii) the location of services, (iii) the billing of services, (iv) the structure of group practices, and (v) patient disclosures.

On August 1, 2013, Congresswoman Jackie Speier (D-CA), along with Rep. Jim McDermott (D-WA), and Dina Titus (D-NV), introduced HR 2914, the “Promoting Integrity in Medicare Act of 2013” (PIMA), in the House of Representatives. The bill seeks to eliminate the IOAS exception for advanced diagnostic imaging (which includes MRI, PET and CT scans), anatomic pathology, radiation therapy and physical therapy.  The bill also proposes to create new compliance review procedures and increase the penalties under the Stark Law for such prohibited self-referrals.

According to Congresswoman Speier, “[o]ver the years, use of the in-office ancillary services exception has dramatically increased, resulting in increased costs to the Medicare program…Patient convenience and streamlined services are important, but improper use of the exception creates unnecessary costs.”  In support of her bill, Congresswoman Speier cites recent studies performed by the Government Accountability Office (GAO) which found an increase in the use of certain DHS where providers self-refer.  For example, the GAO found that, “for advanced diagnostic imaging, providers who self-referred made 400,000 more referrals for advanced imaging services than they would have if they were not self-referring, at a cost of more than $100 million in 2010.”

Opinions are Divided

As can be expected, the introduction of PIMA has created a divide between those groups who support the bill, such as the American Clinical Laboratory Association and the American College of Radiology, and those that feel that the IOAS exception as it is currently drafted offers the best care to patients.  On August 12, 2013, over thirty national medical groups – including the American Medical Association and the American College of Surgeons – wrote a letter to all members of the U.S. House of Representatives opposing the legislation.  The letter states that “[i]f enacted, [H.R. 2914] would limit access to life-saving services for many patients and stifle new innovative reforms already underway to improve care delivery and quality improvement.  It would raise the costs to Medicare beneficiaries and the Medicare program by driving patients to more costly facilities thereby requiring additional expenditures.” 

New York Health Law Blog will be monitoring the movement of the bill and will post periodic updates.  Farrell Fritz, P.C. attorneys know the intricacies of the Stark Law, and can advise providers on how to structure their practices to comply with the many laws and regulations governing medical practices.